Article: When do I become personally liable for the company’s taxes?
30 Sep 2026
The starting point is that a limited company is itself responsible for its taxes and charges. However, the person representing the company may, in certain situations, become personally liable for the company’s unpaid taxes. The rules are commonly referred to as representative liability.
When can representative liability arise?
The key provision is found in Chapter 59, Section 13 of the Tax Procedures Act. The rule means that a representative of a company who, intentionally or through gross negligence, has not paid the company’s tax or charge may become liable to pay together with the company. The liability to pay is linked to the point in time when the tax or charge was originally due.
In a limited company, the board members are normally representatives. Even someone who is not a formal representative may be covered if the person has in fact had decisive influence over the company. However, it is not the case that an unpaid tax automatically becomes the representative’s private debt merely because the requirements of the provision are met. For liability to arise, the Swedish Tax Agency must actively demand payment and bring an action in the administrative courts.
Case law shows that the scope for avoiding liability is very limited. In practice, it is required that there has been a sudden and unforeseen event occurring in close connection with the due date for the taxes (e.g., a serious illness). In addition, the representative must act promptly after the event to wind up the company’s debts in an orderly manner (see further below).
Claiming that you were a “passive” board member, relied on others (e.g., an accounting consultant), received incorrect advice, hoped for future income, or lacked knowledge of financial obligations generally does not mean that you avoid liability.
In 2026, however, rules were introduced that make it possible to reduce liability in whole or in part if it would be considered unreasonable to impose full liability on the representative. In this assessment, particular consideration must be given to whether
1. the representative lacked an ownership interest and decisive influence in the legal entity,
2. the representative took effective measures to limit the damage caused by the failure to pay,
3. the representative’s ability to pay is permanently reduced due to age, illness, or similar circumstances, or
4. the payment obligation is not reasonably proportionate to the negligence.
To avoid the risk of personal liability, the representative must, no later than on the due date for the taxes, take effective measures for a coordinated winding-up of the company’s debts, which means applying for bankruptcy or initiating a corporate reorganizer. Other options are for the company to suspend its payments or request breathing space (more on this shortly below).
Suspension of payments – a short period to reflect
Another way to avoid personal liability when the company has acute payment problems is suspension of payments. The Swedish Tax Agency describes this as the debtor informing all of its creditors that the debts that have arisen will not be paid. The purpose is to create time for constructive measures.
For the suspension of payments to protect against representative liability, the Swedish Tax Agency states that, among other things, it must be in writing and well documented, addressed to all creditors, and followed within three weeks by effective measures (i.e., bankruptcy or a corporate reorganizer). An intention to wind up the business at some later point is not sufficient.
It is important to note that a suspension of payments does not protect against personal liability for taxes that fell due before the suspension of payments.
The suspension of payments should therefore be seen as a temporary measure to gain time to consider the available options—not as a solution in itself.
New rules on breathing space
As of June 30, 2026, there is also a specific option to apply to the Swedish Tax Agency for breathing space. Breathing space means a two-month time limit for a representative who needs time to deal with the company’s payment problems.
During the breathing space, the representative can consider their options and take measures to resolve the situation without risking personal liability for tax debts whose original due date falls during the breathing-space period. If the debts still remain when the breathing space ends and no effective measures (i.e., bankruptcy or a corporate reorganizer) have been taken, the representative may still become personally liable.
The breathing space is personal. If a company has several representatives, each must therefore apply individually. Nor does it change the company’s obligation to pay taxes and charges on time. The Swedish Tax Agency’s starting point is that breathing space should be granted unless there are special reasons not to.
The new rules therefore give a representative a longer and clearer scope for action when a company suddenly encounters payment problems. However, both the older rules on suspension of payments and the new rules on breathing space are based on the same practical guiding principle: act in time, and preferably before the tax falls due.
Dan Bengtsson
Attorney-at-Law at Carler Law Firm
More information is available on the Swedish Tax Agency’s website:
Representative liability: https://www.skatteverket.se/foretag/skatterochavdrag/skattekontobetalaochfatillbaka/betalningsansvarforjuridiskapersoner.4.6f9866931215a607a4f80003631.html
Suspension of payments:
https://www4.skatteverket.se/rattsligvagledning/edition/2026.13/322180.html
